Principles Of Accounting Level 1 Chapter 1

Dividends – distribution of earnings from the company to shareholders
Current Assets – Receivables and cash: Cash/equivalents; accounts receivable, less allowance for doubtful accounts; Inventory; interest receivable; short-term notes receivable; supplies, prepaid expenses.
compound journal entry – journal entry that affects more than 2 accounts
par value characteristics – 1. legal capital must be retained in the business
2. set par value low
3. ha no relationship to fair market value
4. some states allow "no-par value stock" with a "state value"
5. some don't have state on par value
Debt financing – Borrowing money
An internal service fund uses budgetary accounts? T/F – False
solvency – the ability of a company to pay interest as it comes due and to repay the balance of debt due at its maturity
Proprietorship – A business owned by one person is called Proproetorship
service business – provides a needed service for a fee
Tarnish Industries uses departmental overhead rates and is planning on a $1.80 per direct labor hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.    Tarnish Industries produces miniature models of farm equipment. These collectibles are in great demand. It takes two operations, molding and finishing, to complete the miniatures. Next year's expected activities are shown in the following table:    Molding Finishing Direct labor hours   75,000 DLH   160,500 DLH Machine hours   98,000 MH   81,500 MH
Accrued Expenses – Expense items that relate to the current period but have not yet been paid and do not yet appear in the accounting records.
Perpetual – companies maintain DETAILED records of the cost of each inventory purchase and sale, better control over inventories
COGS calculated after each purchase/sale
uses "inventory" account
return on net operating profit – =profit before interest and taxes/tangible assets
promissory note – a written promise made by a person or business to pay a certain sum of money to another person or business at a specified time in the future
Tаrnish Industries uses depаrtmentаl оverhead rates and is planning оn a $1.80 per direct labоr hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.    Tarnish Industries produces miniature models of farm equipment. These collectibles are in great demand. It takes two operations, molding and finishing, to complete the miniatures. Next year's expected activities are shown in the following table:    Molding Finishing Direct labor hours   75,000 DLH   160,500 DLH Machine hours   98,000 MH   81,500 MH
cost allocation – the process by which factory overhead or other costs are assigned to a cost object, such as job
Current ratio – Current assets/current liabilities
revenue realization principle – states that revenues are recognized when
1. goods or services are delivered
2. there is persuasive evidence of an arrangement for customer payment
3. the price is fixed or determinable
4. collection is reasonably assured
non current or long -term liabilities – liabilities that will take longer than a year to settle

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